Published: June 21, 2013 at 3:24 pm

About three hours into the week’s final day of trading, Citigroup Inc (NYSE:C) stock is down a staggering 6.80%. There’s no mystery as to what’s behind the plummet, as well as the rest of the market’s demise this week: a little thing Ben Bernanke likes to call “tapering.”

The Fed giveth, and the Fed taketh awayIn case you missed it, here’s the overview: On Wednesday, the Federal Reserve chairman announced his plan to taper quantitative easing, the bond-buying program investors have come to mentally rely on as they’ve piled more and more money into the stock market.

So long as the economy continues to improve, the pace of bond-purchases will begin to slow later this year, with a target of mid-2014 for a complete halt to buying. By then, the rate of unemployment is projected to be down to 7%. Finally, interest rates will be kept low until unemployment drops to 6.5%.

Foolish bottom lineWith this announcement, markets of all kinds all over the world have been freaking out: Equity markets have tumbled, bond yields are rising, and commodity prices are dropping. Here at home, the S&P 500 is down 3.24% for the week, the Dow Jones Industrial Average is down 2.98%, and the Nasdaq is down 3.29%.

Of course, no one should be surprised at the Fed’s move. Bernanke’s been talking about tapering for months, without announcing any firm plans. I think it’s obvious he’s been trying to prepare investors for the inevitable: that QE had to end sometime, and that time is now. Although that isn’t even the case: Tapering will only begin later this year, and then only if the economic data remains positive.

Still, the markets will do what they will do, and there’s an argument to be made that a stock market bubble had formed because of the excess liquidity the Fed has been pumping into the system for years now, but especially since last September, when the third round of QE began. So as long as this market tumble stabilizes soon, investors will have cause to be joyful: bubbles aren’t good for anyone, because once they pop, what should have been a reasonable correction can turn into panic and subsequent rout.

Citigroup Inc (NYSE:C) really took it on the chin this week, though. It’s performance was worse than even that of Bank of America Corp (NYSE:BAC)‘s. It’s possible investors are concerned about breaking news out of the U.K., involving a Citigroup Inc (NYSE:C) trader being criminally charged with manipulating the LIBOR. So far, the scandal seems contained, but it’s early on, and investors may be lumping that and the Fed’s announcement together.

But as always, Fools, stay focused on the fundamentals of the companies you’re invested in, and tune out the market noise. Obsessive ticker checking can lead to more trades, which costs money, and can also lead to poorer portfolio performance. I personally own stock in Citigroup Inc (NYSE:C), and would counsel other investors to hold their positions through this bit of market turbulence. This drop could even be looked at as a buying opportunity.

Fool contributor John Grgurich owns shares of Citigroup, Follow John’s dispatches from the not-so-muddy trenches of high-finance and big-banking on Twitter @TMFGrgurich. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America and Citigroup.

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